Irrevocable Trusts

There are two kinds of inter vivos trusts: revocable and irrevocable. You must understand what a Revocable Trust is in order to compare the differences of an Irrevocable Trust.

Revocable Trusts

Revocable trusts are often referred to as "living" trusts. With a revocable trust, the person who created the trust, called the "grantor" or "donor," maintains complete control over the trust and may amend, revoke or terminate the trust at any time. This means that you, the donor, can take back the funds you put in the trust or change the trust's terms. Thus, the donor is able to reap the benefits of the trust arrangement while maintaining the ability to change the trust at any time prior to death. *need to give some real-world examples of trusts 

Revocable trusts are generally used for the following purposes:

  1. Asset management. They permit the named trustee to administer and invest the trust property for the benefit of one or more beneficiaries.
  2. Probate avoidance. At the death of the trust grantor, the trust property passes to whoever is named in the trust. It does not come under the jurisdiction of the probate court and its distribution need not be held up by the probate process. However, the property of a revocable trust will be included in the grantor's estate for tax purposes.
  3. Tax planning. While the assets of a revocable trust will be included in the grantor's taxable estate, the trust can be drafted so that the assets will not be included in the estates of the beneficiaries, thus avoiding taxes when the beneficiaries die.

Irrevocable Trusts

An irrevocable trust cannot be changed or amended by the grantor. Any property placed into the trust may only be distributed by the trustee as provided for in the trust document itself. For instance, the grantor may set up a trust under which he or she will receive income earned on the trust property, but that bars access to the trust principal. This type of irrevocable trust is a popular tool for Medicaid planning.



With an office in Germantown, Tennessee, the Bradley Law Firm PLLC assists clients with Estate Planning, Wills, Trusts, Special Needs Planning, Conservatorships & Guardianships, Probate and Estate Administration, Business Law, Mergers and Acquisitions, Self-Directed IRA's, VA Pension Planning, VA Service-connected Disability Pensions (including Agent Orange and Nehmer Claims), Self-directed IRA’s, Commercial Real Estate and Residential Real Estate, Social Security Disability Insurance, and Supplemental Security Income cases throughout the Memphis area, West Tennessee, North Mississippi and Eastern Arkansas. The Firm is also licensed in Kentucky.



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